Nifty 50 Chartist Sees Crucial Support at 24,500 for Potential Upside Momentum

Nifty 50 Faces Resistance at 24,500

The Indian stock market's key index, Nifty 50, is facing a significant resistance at 24,500, a level that is crucial from a larger perspective, according to Milan Vaishnav, MSTA, founder of Gemstone Equity Research & Advisory Services.

Vaishnav believes that two companies, CG Power and Industrial Solutions, and ABB India, have room for an upside. Both companies are likely to perform well in the medium- to long-term as their trend trajectory remains intact. Despite a sharp rally in Cummins India and Exide Industries on Wednesday, Vaishnav recommends chasing such an upmove, albeit with caution.

Small quantities may be bought, and the rest may be accumulated in a non-aggressive manner, while those investors who are already invested can stay invested. Vaishnav's advice is based on technical evidence, which suggests that Swiggy has bottomed out. The stock is expected to see increased momentum once it crosses the Rs 270-275 zone.

Read also: SpaceX Seeks Record $75 Billion IPO, Potentially Positioning Elon Musk as the World's First Trillionaire

The Nifty 50's immediate hurdle is expected to be 24,000, while 23,800 is likely to act as immediate support. The 24,500 level is the 100-week MA for the Nifty, which was violated in March this year. As long as the market stays below this point, the violated support is likely to act as a formidable resistance for the Nifty.

Vaishnav does not expect the Bank Nifty to outperform the Nifty 50 from here, especially after its recent underperformance. On a day-to-day basis, the Bank Nifty may sporadically outperform the Nifty, but on a week-on-week basis, it is expected to relatively underperform.

The India VIX has fallen to pre-war levels, but the market is yet to gain strong momentum. Vaishnav believes that this divergence is a precursor to any future market move. Ideally, the VIX should be corrected, and the Nifty should move higher towards the 24,500 level, where it is likely to face formidable resistance.

Vaishnav recommends buying two stocks, Aditya Birla Capital and Bharat Forge, which are showing bullish divergences on their leading indicators and are poised for a breakout. He also recommends chasing the upmove in Cummins India and Exide Industries, but with caution, as aggressive buying with such extended moves never comes with a favorable risk-reward ratio.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data